Data center developers flock to Phoenix, with major projects in pipeline

Data center developers flock to Phoenix, with major projects in pipeline

By Ron Davis

The Phoenix metro has been one of the top markets for data center development over the past few years. As new projects complete and start construction, the Valley has one of the deepest pipelines of development in the country.

"Every major North American data center player is in some fashion in the market," said Jacob Albers, head of alternative insights for Cushman & Wakefield. "Everything that's announced is either built-to-suit for a specific user or is pre-leased quite rapidly. It's definitely one of the most exciting and rapidly growing markets right now in North America."

Preliminary end-of-year numbers from Cushman & Wakefield show there are 325 megawatts of new data center capacity under construction in the Valley while another 3,215 megawatts sit in the pipeline at some stage of planning and development, which could take years to fully build out. Some of the big hyperscale users include Google, Meta Platforms Inc., QTS Realty Trust, and Vantage Data Centers, which are well underway in their build-out of data centers. 

Hyperscale users typically lease a dedicated floor or entire data center building, while colocation data centers provide storage for numerous customers through a retail or wholesale mode.

Google started construction this summer on the first of three phases of its $1 billion data center in southeast Mesa. Google is on the clock to build out the entire 750,000-square-foot data center campus. That data center will power the company's tools like Search, Gmail, Maps and ongoing artificial intelligence innovation.

Several data center projects reached milestones in 2023, including Denver-based Vantage Data Center topping out its second phase of a more than $1.5 billion, 1 million-square-foot campus in Goodyear. Phase II is expected to be delivered in the spring of 2024. 

Prime Data plans $2 billion campus in Avondale

Elsewhere in the West Valley, in May, California-based Prime Data Centers bought 66 acres in Avondale with plans to build a new $2 billion campus. That site could see 1.3 million square feet across five data center buildings with 210 megawatts of power. The first data center is expected to be completed by Q3 2025 and total 260,400 square feet with 42 megawatts of capacity.

QTS, which acquired more than 400 acres in Glendale in 2022, started construction this year on the next phase of an 85-acre data center campus near 40th Street and Loop 202 in Phoenix. Stack Infrastructure and Aligned Data Centers also have big plans within the city of limits of Phoenix.

Outside of Google, other big players are looking to get in on the action in Mesa, which includes e-commerce giant Amazon.com. Earlier this year, Amazon submitted plans for two separate data centers totaling nearly 1 million square feet of space, which sit in the pipeline. Other players such as Dallas-based CyrusOne Inc. Virginia-based EdgeConneX and Connecticut-based Edged Energy have also filed plans to collectively bring more than 2 million square feet of data centers in the East Valley city.

White no plans have been submitted as of Dec. 22, Utah-based Novva Data Centers made a big purchase this year at the Arizona State Land Department auction, spending $62.7 million for 165 acres of Mesa land where it will attempt a design-build and operate water-free, air-cooling data centers on-site.

"That's a significant amount of capacity to work through," Albers said. "I think beyond that, the question that will arise in every market that is dealing with this is 'How much power is going to be available? And how much can you get committed from utility providers as well as other potential sources?' ... You want that commitment on the forward end of development."

Earlier this month, Meta secured its power source from Salt River Project and European clean energy provider Orsted in a solar energy deal. The more than 2,000-acre Eleven Mile Solar Center, which is under construction east of Casa Grande and about halfway between Coolidge and Eloy, is expected to be running in 2024 and power the 396-acre data center being developed by Meta.